Paychecks issued for the 12/31/11 pay period (payday 1/6/12) are the first for tax year 2012. Social Security and VDI taxes are withheld again for those employees who reached the maximum withholding in 2011. 2012 benefit deductions, including BeWell incentives, also begin with this paycheck.

New federal and state tax withholding rates are in place for this paycheck, and several compulsory payroll tax rates have changed for 2012. The California Short-Term Disability rate has decreased from 1.2% to 1.0%. The Social Security tax rate decrease implemented as the result of the Tax Relief Act of 2010 has been extended through February 29, 2012. This decreases the employee Social Security tax rate from 6.2% to 4.2%. Pending further legislation, the Social Security tax rate will revert to 6.2% on March 1, 2012.

The tax rates in effect for 2012 are summarized in the table below. You may update your federal and/or state income tax withholding allowances at any time by clicking the Edit W4 and DE4 Information link on the Employee Information tab in Axess. Click here for step-by-step instructions.

Tax Deduction Code

Description

Tax Rate

Fed Withholding

Federal Income Tax

W-4 Rate

Fed MED/EE

Medicare

1.45%

Fed OASDI/EE

Social Security

4.2% on first $110,100 wages earned

CA Vol Dis/EE

Short-Term Disability

1.0% on first $95,585 wages earned

CA Withholding

State Income Tax

DE-4 Rate

Please note: If you claimed exemption from federal and/or state income tax withholding for tax year 2011 and wish to continue for tax year 2012, you are required to file an updated W-4/DE-4 in Axess by February 15, 2012.